Board Committees

BOARD COMMITTEES

The Board has delegated specific responsibilities to three (3) subcommittees namely Audit, Nomination and Remuneration Committees. These Committees have the authority to examine specific issues and report to the Board with their recommendation. The ultimate responsibility for the final decision on all matters, however, lies with the Board.

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Audit Committee

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Nomination Committee

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Remuneration Committee

Independent and Non-Executive Directors play a leading role in these Committees. Details of the membership and a summary of the terms of reference of each Committee appointed by the Board are published in the Annual Report.

5.1 Audit Committee

5.1.1

The Audit Committee comprises of no fewer than three (3) members, a majority of whom are Independent Directors. All members of the Committee shall be financially literate and at least one of the members of the Committee must fulfill the Paragraph 15.09(1)(c) of the Listing Requirements of Bursa Malaysia.

5.1.2

No alternate Director can be appointed as a member of the Audit Committee. If a member of the Committee resigns, dies or for any reason ceases to be a member with the result that the number of members is reduced below three (3), the Board shall within three (3) months of the event appoint such number of the new members as may be required to fill the vacancy.

5.1.3

The Audit Committee will elect an Independent Director from amongst them as its Chairman. The Chairman of the Committee should engage on a continuous basis with senior management and the external auditors in order to be kept informed of matters affecting the Company.

5.1.4

The primarily function of the Committee is to assist the Board in fulfilling its responsibilities in establishing and appraising the effectiveness of the sound framework to manage risks that include:

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Determine level of risk tolerance

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Identify, assess and monitor key business

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Articulate and review of internal control system

5.1.5

The Committee also overseas financial reporting in compliance with the applicable financial reporting standards and evaluates the internal and external audit processes and to review the following and report the same to the Board:

a)

Internal Audit

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Review and report on the adequacy and effectiveness of the internal audit scope and plan, functions, competency and resources of the internal audit division and that it has necessary authority to carry out its work.

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Review the results of the Lii Hen Group’s internal audit procedures and the adequacy of actions taken by the Management based on the reports.

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Review the adequacy and effectiveness of internal control.

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Approve any appointment or termination of staff of the internal department or outsourced consultants of the internal audit function. Provide the resigning staff member or outsourced consultant an opportunity to submit his/their reasons for resignation.

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Provide recommendation to the Board for certain tasks of the internal audit functions to be outsourced if no sufficient resources to carry out the function.

b)

External Audit

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Review and monitor the suitability of external auditors and make recommendations to the Board on the appointment of external auditors, their remuneration and question of resignation or dismissal.

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Review with the external auditors, the audit plan, the scope of their audits and reports.

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Review majors audit findings and response with Management and external auditors including the status of previous audit recommendations.

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Review the assistance given by the employees of the Lii Hen Group to the external auditors and any difficulties encountered in the course of the audit work.

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Ensure the independence of external auditors throughout the conduct of the audit engagement in accordance with the relevant professional and regulatory requirements.

c)

Financial Reporting

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Review the quarterly and annual financial statements of the Lii Hen Group and of the Company for recommendation to the Board for approval, focusing particularly on:

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any changes in or implementation of major accounting policies and practices.

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significant adjustments and unusual events arising from the audit.

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the going-concern assumption.

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compliance with accounting standards, Main Market Listing Requirements of Bursa Securities and other legal requirements.

d)

Related Party Transactions

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Review any related party transaction and conflict of interest situation that may arise within the Lii Hen Group and the Company.

e)

Allocation of ESOS

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Review the allocation of ESOS, if any, to ensure in compliance with the allocation criteria determined by the ESOS Committee and in accordance with the Bye-Laws of the ESOS.

f)

Corporate Disclosure

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Ensure to have an appropriate corporate disclosure policies and procedures which ensure compliance with disclosure requirements of Bursa Securities Listing Requirements.

g)

Other Functions

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Consider and examine any other matters as agreed by the Board and the Committee.

5.1.6

The Committee shall meet at least four times in a year, and such additional meetings as the Chairman shall decide in order to fulfill its duties. The agenda for the Committee meetings shall be circulated before each meeting to members of the Committee. Upon request of any of its members or the internal or external auditors, the Chairman of the Committee shall convene a meeting of the Committee. The quorum for the Committee meeting shall consist of two members of whom the majority of the members present shall be independent directors.

5.1.7

The head of finance, a representative of internal audit department/outsourced internal audit consultants and a representative of the external auditors shall normally attend meetings. The Committee may invite any person to be in attendance to assist its deliberations. Other Board Members may attend meetings upon the invitation of the Committee. The Committee shall meet with the external auditors without executive board members present at least twice a year.

5.1.8

The Board will review the performance of the Audit Committee once in every three (3) years.

5.2

Nomination Committee

5.2.1

The Nomination Committee comprises exclusively of Non-Executive Directors, a majoring of whom must be Independent.

5.2.2

The Nomination Committee will elect an Independent Director from amongst them as its Chairman.

5.2.3

The Nomination Committee’s primarily responsibilities include:

a)

leading the process for Board and Board Committees appointments and making recommendations to the Board.

b)

assessing the Directors on an on-going basis.

c)

annually reviewing the required skills and core competencies of Non-Executive Directors, including familiarization with the Company’s operations.

d)

facilitating Board induction and training of newly appointed Directors.

e)

reviewing Board’s succession plans.

5.2.4

Duties

The Nomination Committee will:

a)

be responsible for identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise.

b)

evaluate the balance of skills, knowledge and experience on the Board and, in the light of this evaluation, prepare a description of the role and capabilities required for a particular appointment of Director.

c)

carry out an annual review of the effectiveness of the Board as a whole; the committees of the Board and the contribution of each individual director, including independent non-executive directors.

d)

Consider candidates from a wide range of backgrounds and look beyond the “usual suspects”.

e)

Give full consideration to succession planning in the course of its work, taking into account the challenges and opportunities facing the Company and what skills and expertise are needed on the Board in the future.

f)

Regularly review the structure, size and composition (including the skills, knowledge and experience) of the Board to ensure the appropriate Board balance and size and make recommendations to the Board with regard to any changes.

g)

Keep under review the leadership needs of the organisation, both executive and non-executive, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace.

h)

Make a statement in the annual report about its activities; the process used for appointments and explain if external advice or open advertising has not been used; the membership of the Committee, number of Committee meetings and attendance of members over the course of the year.

i)

Ensure that on appointment to the Board, Non-Executive Directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, Committee service and involvement outside Board meetings.

5.2.5

The Committee will make the following recommendations to the Board:

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As regards plans for succession for Directors and Senior Management to maintain an appropriate balance of skills on the Board;

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As regards the re-appointment of any Non-Executive Director at the conclusion of their specified term of office;

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Concerning the re-election by shareholders of any Director under the retirement by rotation provisions in the Company’s articles of association;

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Concerning any matters relating to the continuation in office of any Director at any time; and

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Concerning the appointment of any Director to executive or other office other than to the positions of Chairman and Chief Executive, the recommendation for which would be considered at a meeting of the Board.

5.2.6

In the event that the Board appoints a new Chairman, the Nomination Committee will be guided by the following principles prior to making recommendations to the Board:

a)

That the Senior Independent Director leads the appointment process.

b)

That a systematic evaluation be undertaken to identify the skills and expertise required for the role.

c)

That all short listed candidates be considered with the possibility of obtaining external advice, if necessary.

5.3 Remuneration Committee

5.3.1

The Remuneration Committee comprises wholly or mainly Non-Executive Directors and a majority of the Committee members are appointed from amongst the Independent Non-Executive Directors.

5.3.2

The Remuneration Committee will elect an Independent Non-Executive Director from amongst them as its Chairman.

5.3.3

The Remuneration Committee’s primary responsibility includes establishing, reviewing and recommending to the Board the remuneration packages of each individual Executive Director, and the Company Secretary, and to ensure remuneration package of Directors are aligned with business strategy and long term objectives of the Lii Hen Group.

5.3.4

The Remuneration Committee is also responsible for recommending the remuneration for the Senior Management and to ensure that the remuneration should reflect the responsibility and commitment that goes with it.